Variable annuities are investments that, at some point either immediately or after a certain amount of time, provide periodic payments to investors. They are often used by people who receive a lump sum payment - such as receiving their pension all at once - to invest that money in, with the goal being that they will receive regular payments from that investment. The benefit is that the money is invested, that there is a regular income stream that either begins immediately or after a set period of time, and that there are tax deferred benefits.
All in all, those are great reasons for some investors to consider variable annuities. Except that some insurers have found that variable annuities are not profitable and, in fact, they may not have enough money to cover the payouts. Some investors have allegedly been asked to not annuitize their annuity, meaning not receive payouts on it. In other words, that guaranteed lifetime income that was used to market the annuity may not be entirely guaranteed.
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The problem for many is that they buy variable annuities when they have received a lump sum for their pension, meaning they are at or very close to retirement age and not able to withstand losing - or not having access to - money they counted on.
If investors were misled about the risk associated with variable annuities or if the company issuing the annuity is violating its contract with the investor, investors may be able to file a complaint against the company. If a financial advisor recommended an unsuitable investment for the investor, the investor may be able to file a complaint against the advisor who recommended the annuity.